Title I Fiscal Requirements: Spending Funds in Schoolwide Programs. Agenda: Schoolwide: Legal Resources

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1 Title I Fiscal Requirements: Spending Funds in Schoolwide Programs Kristen Tosh Cowan, Esquire Brustein & Manasevit KToshCowan@bruman.com Fall Forum Agenda: Program: What can be included Fiscal: 3 scenarios for consolidation Supplanting Mechanics for consolidation Reporting Time and effort records 2 Schoolwide: Legal Resources Statute: Section 1114 Regulations: 34 CFR Federal Register Notice, July 2, er/2004-3/070204a.html 3 1

2 Non-Regulatory Guidance: Designing Schoolwide Programs Guidance: March designingswpguid.doc 4 Non-Regulatory Guidance: Title I Fiscal Issues, February 2008 (replacing May 2006) fiscalguid.doc Consolidating funds in schoolwide programs, MOE, SNS, Comparability, Grantbacks, Carryover 5 Schoolwide Programs (SWP): Basic Requirements Consolidate federal, state, and local funds to upgrade the entire educational program Ensure all children meet standards, particularly those most at risk Requirement: 40% poverty Schoolwide plan 6 2

3 What federal programs can be consolidated? Federal Register, July 2, 2004 All formula (non-competitive) Except Reading First Consolidate, but with caveats - Includes IDEA - up to cap (but not exempt from programmatic requirements) Migrant; Indian Ed restrictions regarding consultation 7 All discretionary (competitive) Still must comply with application Need not account separately for specific expenditures ED only (no School Lunch, Head Start) 8 For Formula Grants Meet Intents and Purposes A school that consolidates federal funds is not required to meet most of the statutory and regulatory requirements of the specific federal programs applicable at the school level. Not required to ID particular children or provide supplemental services Must meet intents and purposes of program 9 3

4 Examples of meeting Intents and Purposes See Federal Register Notice July 2, For Discretionary Grants Must still carry out all activities described in application But do not need to account separate for specific expenditures of the discretionary grant funds 11 Recordkeeping in SWP School operating SWP that consolidates is not required to maintain separate fiscal accounting records, by Federal program, that ID the specific activities supported by each program s funds. 12 4

5 Guidance: Three scenarios # 1: Consolidate federal, state, and local # 2: Consolidate only federal # 3: Do not consolidate Title I with other federal, state, and local (nothing consolidated) 13 What does it mean to consolidate funds? E-2 and E-3 Treat funds like a single pool of funds Lose individual program identity School has one flexible pool of funds Use to support any activity of the schoolwide program without regard to which program contributed the specific funds used for a particular activity 14 What does it mean to consolidate funds? (cont.) LEA does not literally need to combine funds in a single account or pool with its own accounting code Pool is used conceptually See p. 51, footnote 2 IMPORTANT: Identify in SWP PLAN: consolidated programs and the amounts consolidated from each! 15 5

6 What about state limitations on consolidation? NCLB Section 1111(c)(9) and (10): Each SEA must encourage schools to consolidate funds from Federal, State, and local sources in their schoolwide programs, and 16 Each State plan shall contain assurance that - the SEA will modify or eliminate State fiscal and accounting barriers so that schools can easily consolidate funds from other Federal, State, and local sources for schoolwide programs 17 Scenario #1: Consolidating Federal, State, and Local Funds 18 6

7 What if the LEA consolidates federal, state, and local?? Question E-8 When Title I Part A funds are consolidated with State and local funds.... they lose their identity. No distinction between federal and nonfederal 19 Scenario #2: Consolidating Only Federal Funds 20 Can the LEA consolidate only federal in a SWP? Yes. (E-4) Single Federal consolidated pool. From an accounting perspective, the funds from the contributing Federal programs lose their individual identity when they become part of a consolidated schoolwide pool and would be accounted for as part of that pool rather than by the individual programs that contribute to the consolidated schoolwide pool. 21 7

8 On what activities can consolidated Federal funds be used? 1. Activities to address the educational needs of the school Identified by needs assessment Articulated in SW Plan E-5, etc. 22 What is educational need? Not addressed in guidance B&M best guess: Instruction yes Instructional support probably yes Administration possibly yes Operational no 23 On what activities can consolidated Federal funds be used? 2. OMB Circular A-87 applies Cost Principles for State, Local and Tribal Governments Applies to all federal funds not education specific General: necessary and reasonable Specific: Allowability of salaries/wages (time and effort records), equipment, alcohol 24 8

9 Scenario #3: What if there is NO consolidation at all? Only Title I supports the plan. How must Title I $ be used? 25 If Title I is not consolidated with other federal, state, and local, then how must the LEA use Title I funds? E-7 On the educational needs of school Identified in needs assessment Articulated in SW Plan OMB Circular A-87 applies 26 If Title I not consolidated (cont.) All kids may participate Need not be supplemental ** Must account for and track the Title I funds separately, identifying the activities the Part A funds support 27 9

10 REMINDER: The Plan! The SWP Plan tells the auditor: What programs have been consolidated How much from each program 28 Supplement not Supplant 29 Supplement not Supplant Statute 1114(a)(2)(B): Title I must supplement the amount of funds that would, in the absence of Title I, be made available from non-federal sources E-18 The actual service need not be supplemental 30 10

11 SNS: Guidance: School must receive all the state and local funds it would otherwise need to operate in the absence of Federal funds Includes routine operating expenses such as building maintenance and repairs, landscaping and custodial services 31 Can Title I $ be used for basic operational expenses? E-8 If only federal combined No, must be for educational needs If federal and non-federal combined Impossible to determine which is federal Be sure sufficient state and local funds allocated to school to meet basic operational needs 32 SCHOOLWIDE PLANNING REQUIREMENTS 1) Comprehensive Needs Assessment 2) Plan 3) Annual evaluation 33 11

12 Components of the SW Plan 1) Identify reform strategies, aligned with the needs assessment, that are research-based and provide opportunities for all children to meet the State s proficient or advanced levels of academic achievement; 2) Provide instruction by highly qualified teachers; 3) Offer high-quality, ongoing professional development; 4) Create strategies to attract highly qualified teachers; 5) Create strategies to increase parental involvement; 34 Components of the SW Plan (cont.) 6) Develop plans to assist preschool students through the transition from early childhood programs to local elementary school programs; 7) Identify measures es to include teachers e in decisions s regarding the use of academic assessments; 8) Conduct activities to ensure that students who experience difficulty attaining proficiency receive effective, timely, additional assistance; and 9) Coordinate and integrate Federal, State and local services and programs. Identify what funding sources are being consolidated 35 The Mechanics of Consolidation 36 12

13 The mechanics of consolidation: EXAMPLE 1: literal consolidation across district for all SWP schools Consolidated schoolwide pool with its own accounting code The expenditures attributed to that code are charged on a proportional basis If Title I contributed 8%, then 8% of SWP expenses charged to Title I 37 What does it mean to consolidate funds? (cont.) EXAMPLE 2: Single school model No single accounting code for SWP For accounting purposes, LEA attributes expenditures back to specific program REGARDLESS of what services those funds support. 38 What does it mean to consolidate funds? (cont.) EXAMPLE 2, cont. Expenditures are allowable without regard to whether they support the program that generated the funds so long as they are incurred to support the schoolwide program plan

14 What does it mean to consolidate funds? (cont.) EXAMPLE 2: Two options for distributing expenditures: 1. proportion p of revenues 2. sequence charging Charge 100% of all employee and non-employee SWP expenditures first to state and local sources and then to Title I and other federal until these funds are spent in their entirety or until the maximum carryover amount is all that remains unexpended. B&M: Risky! Problems with carryover and CMIA 40 What about state accounting requirements? States require LEAs to identify expenditures by functional categories like salaries, travel, supplies, etc. However, an LEA would not be required to track how much it spends on salaries back to a specific program included in the consolidated SW pool. p. 53 & Reporting Expenditures Use any reasonable basis Proportional basis Example: If 25% of combined funds are from Title I, then report 25% of expenditures as Title I expenditures 42 14

15 Proportional Basis (or any other reasonable method ) Use for identifying: Carryover Amount unused non-federal funding MOE Comparability Reporting expenditures back to State or USDE State Per Pupil Expenditure (SPPE) Title I Part A ARRA Reporting 43 Carryover Rule: Section 1127: Not more than 15% of the LEA s Title I Part A allocation will remain available for obligation in the second year SEA may waive once every 3 years 44 Carryover in a SWP E-22 How to calculate 15% limitation? Based on 15% of LEA s Part A allocation How to calculate amount left over at school level? Look at $ left over in school pot if Title I contributed 10%, then 10% of remaining funds are Title I Part A 45 15

16 ESEA Maintenance of Effort RULE: Section 9521: LEA may receive ESEA funds only if the combined fiscal effort per student or the aggregate expenditures across LEA from nonfederal funds from preceding FY was not less than 90% of the second preceding FY. 46 Maintenance Of Effort in SWP E-20 Must exclude federal funds Identify proportion of federal contribution, and allocate expenditures to federal in same proportion EXAMPLE - If federal programs contributed 25%, then 25% of expenditures attributed to federal and excluded. 47 Comparability RULE: 1120A: LEA may receive Title I funds only if nonfederal funds are used to provide services in Title I schools that are at least comparable to services in non-title I schools Often measured by student/ instructional staff ratios or salary ratios 48 16

17 Comparability in SWP E-19 (refers to B-6) Must exclude federally-paid instructional staff Identify proportion of federal contribution; assume same percentage of instructional staff in school was paid with federal funds and exclude from comparability determination 49 School Improvement: Professional Development If school ID for improvement, must spent 10% of Title I allocation on professional development TAS: 10% of Title I funds SWP: Amount equal to 10% of Title I funds 50 Paraprofessional Qualifications Applies only to instructional paraprofessionals working in a Title I program TAS: Paid with Title I funds SWP: All instructional paraprofessionals 51 17

18 Time and Effort Requirements 52 History: Contradictory Guidance : OESE: No time distribution records required OCFO & Compliance Supplement: Semi-annual May 2006: If consolidate in single account, then keep nothing. If not consolidated in single account, then must meet A-87 rules. 53 February 2008: Title I Fiscal Issues (replaced May 2006) fiscalguid.doc Question E

19 Schoolwide time records If LEA/school consolidates.... Federal, state, and local funds Then must keep... No time and effort records Federal only Nothing (only Title I funds SWP) Single cost objective semi-annual Multiple cost objective monthly PAR Single cost objective semi-annual Multiple cost objective monthly PAR 55 Scenario #1: If federal, state, and local funds consolidated... Employees paid with consolidated funds are not required to file Time & Effort records. There is no distinction between staff paid with Federal funds and staff paid with State or local funds. 56 If federal funds kept separate from state and local... Employee who works on single cost objective must furnish a semi-annual certification. a single Federal program whose funds have not been consolidated (scenario #3) or Federal programs who funds have been consolidated but not with State and local funds (scenario #2) 57 19

20 PROBLEM!! Cost objective is being defined d by accounting structure, not based on what employee works on! 58 If federal funds kept separate from state and local... Employee who works on multiple cost objectives must maintain monthly PARs. in part on a Federal program whose funds have not been consolidated in a consolidated SW pool (scenario #3) and in part on Federal programs supported with funds that have been consolidated in a pool (scenario #2) or on activities funded from other revenue sources 59 PROBLEM!! Cost objective is being defined by accounting structure, not based on what employee works on! 60 20

21 Solution: Guidance should have been: Schoolwide Program PLAN = single cost objective If working on plan = semi-annual certifications 61 In absence of clarity, we recommend: 1) Do not split fund anyone! 2) Keep semi-annual certifications stating employees spent 100% of time on schoolwide programs 62 SAFEST: IF: Works 100% on SWP Plan Paid 100% from consolidated pool of federal, state, and local (scenario #1) THEN: No records are required. (No distinction between federal and nonfederal) 63 21

22 SAFEST: IF: Works 100% on SWP Plan Paid 100% from consolidated federal pool (scenario #2) THEN: Do semi-annual certifications I spent 100% of my time on SWP 64 SAFEST: IF: Works 100% on SWP Plan Paid 100% from single federal program (not consolidated)(scenario #3) THEN: Do semi-annual certifications I spent 100% of my time on SWP 65 RISKY: IF: Works 100% on SWP Plan Paid 50% from consolidated federal pool and 50% from non-federal money (not consolidated) (scenario #2) THEN: Do monthly PARs What do they say?? 66 22

23 RISKY: IF: Works 100% on SWP Plan Paid 50% from single federal program and 50% from single federal program (scenario #3) THEN: Do monthly PARs What do they say?? 67 SAFE: IF: Works 50% on SWP Plan and 50% on Reading First (not included in Plan) Paid from any combination (doesn t matter) THEN: Keep monthly PARs I spent 50% of my time on the SWP Plan and 50% on Reading First 68 Blanket Semi-Annual Certification Single cost objective (semi-annual cert) Multiple employees Signed by supervisor with first-hand knowledge (principal) 69 23

24 Closing Thought: The PLAN is very IMPORTANT!! 70 QUESTIONS AND DISCUSSION 71 This presentation is intended solely to provide general information and does not constitute legal advice or a legal service. This presentation does not create a client-lawyer relationship with Brustein & Manasevit and, therefore, carries none of the protections under the D.C. Rules of Professional Conduct. Attendance at this presentation, a later review of any printed or electronic materials, or any follow-up questions or communications arising out of this presentation with any attorney at Brustein & Manasevit does not create an attorney-client relationship with Brustein & Manasevit. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances